Analyzing / Estimating Utility Costs

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Ok.....basic question - how do you analyze utes for rentals? Garbage, water/sewer, heat for boilers (multi family), etc? Are SFR's different that duplexes, multifamily. Thanks in advance for any help.


@Patrick Hall these items are part of your market knowledge that you will need to acquire. I am constantly analyzing deals so that I can further sharpen my knowledge of my local sub market. This helps me as an investor and as a realtor, because I can more accurately predict expenses on small multifamily properties or larger apartment buildings in my target area (Berwyn/Brookfield). 

There are some key differences to look for, mostly revolving around the water bill. In single family, most of the time trash, water and sewer are combined onto one bill. In small multi family this can be different. For instance, I own a four unit in Lyons, IL where I pay garbage separately from the water bill. In Berwyn, which is the next town over, the trash is included with the water bill. 

These types of small, nuanced differences account for $500-750 a year in cash flow. This amount of cash flow adds up fairly quickly on these smaller deals that only gross 40k per year. 

Trying to estimate water sewer cannot normally be done as it depends on where you are.

I own a duplex in New York City, and in the recent year, water/sewer ran me around $200.00 per month, double what it was 10 years ago. I live in the large unit, and I rent to a tenant, a husband, wife and a seven year old. The meter is connected to the internet and I can monitor water usage by the hour, day, week, month, and year. This past month, my wife and our two girls went away for a months vacation, so did my tenant for most of the month. Me alone was using a dollar a day for water without a shower, and $1.50/day  with a shower, and $2.50/day also doing two loads of laundry. Turns out most of the water was for flushing toilets at 7.6 gallons per flush with the old toilets, and I counted between 6 to 8 flushes a day, costing the dollar. At this rate, my water bill would run me $40 for the month. The actual July bill came to $93 with me alone for 2 weeks. Conclusion for me is water usage depends on what you do and the number of people in the house. I always wondered about it, and with everyone away, I was able to figure it out. Based on this, I might change the toilets to the more efficient ones that uses 1.6 gallons per flush.

By contrast, for my SFR located outside New York City, we have various municipal water utilities. In the last three month period, the water bill for the SFR ran a little over $50.00 for a family of five. So compare the $50 for three months, to $600/quarter in the city. Don't believe it includes sewer as the house used to be on septic tank and later added to the municipal sewer but I didn't notice any increase in the rates or mention of sewer on the bill, so I assume it's included in the property taxes.

Why the big difference. The city gets it's water hundreds of miles away and is in the middle of finishing the aqueduct for a third water tunnel costing billions. Outside of NYC, municipal utilities use well water from local wells. We lived in New Jersey for a short while, same story, we get water from local wells and my wife only drinks bottled water. I thought she was paranoid till later news reports came out about ground water contamination due to several chemical business that since closed. They were cancer causing chemicals.

I think your best way to figure it out is to ask the current owners how much they're paying. About 50 years ago, they don't use meters here in NYC, and water is a fixed rate, per property, called a frontage fee.

As to heat, same story. Depends on the insulation, size of the house, how you set the thermostat. For the duplex, gas heating costs less than $1,500/year. We have a service contract that runs over $400/year. The SFR is on oil heat, the tenant pays, so it's hard for me to figure out. I'm on a maintenance plan for the furnace and hot water tank that runs over $600.00/year.

As to garbage, it's included as a municipal service.